Consolidating Federal Loans Into Private Loans

August 16, 2017

Whether you recently graduated or are facing mounting student loans, there are a lot of options to understand and explore. The more you know, the better you will be at managing your student loan debt. Curious about consolidating federal loans into private loans? Before jumping into anything, let’s learn more about consolidating federal and private loans.

Options for Consolidating Federal Loans Into Private Loans

Student loan consolidation takes all your federal student loans and creates one new loan, with a simpler repayment plan. Borrowers with federal student loans can apply for a Direct Consolidation loan. Borrowers with private loans also have options to consolidate through their loan servicer or a competitor. However, Federal and private loans cannot be combined into one loan together.

Interest rates are quite low for borrowers with federal loans. So consolidating federal loans into private loans isn’t really an option. That’s why the government offers the Direct Consolidation loan.

Watch this video to get an overview of consolidation.

Next Steps for Consolidating Student Loans

The next step for the consolidation process is diving into your specific loan information. Understanding student loan debt consolidation means understanding the loans you currently have. Getting all the details, terms and specifications for each of your loans is imperative to making the decision to consolidate or not.

Make sure you know all of the following information about your student education loans. Each of these items can make your loans a better or worse candidate for consolidation:

Private, federal or a mix of both

Repayment start date

One loan payment or multiple

Career field

Income expectations

Interest rates

Finally, your college’s financial aid office, some of your peers, the Department of Education, or ACCC can offer more advice on your unique financial situation. Use as many reputable resources as you can to get a game plan for debt repayment.

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Michelle is a regular contributor to Talking Cents. She has taken several financial courses on debt management and is ready to circulate what she has learned from them as well as lessons from her own life- family to DIY projects to student loan debt.

About Blog

Talking Cents was created by the staff of the nonprofit organization, American Consumer Credit Counseling (ACCC). Not satisfied with providing credit counseling, debt management, and financial education alone, these renegade employees took to the blogosphere in the hopes of helping not only their current clients, but the rest of the world at large to tackle more of the topics affecting people’s everyday financial lives.